Morton Fraser Corporate Bulletin February 2010

On 28 December 2009, the Provision of Service Regulations 2009 brought into force new legal obligations specifying the information that service providers must provide to their customers. The Regulations also specify how complaints must be dealt with.

The Regulations apply to all service providers operating within the UK, subject to the following main exceptions:- financial services, electronic communications, transport, temporary work agencies, healthcare, audiovisual, gambling, and social services.

The information which service providers are required to give their customers includes:-

• details of any trade or professional registration or membership of any authorisation scheme;
• VAT number;
• any standard terms and conditions;
• the price of the service;
• any after-sales guarantee;
• the main features of the service; and
• details of any professional liability insurance.

The information can be provided online, made available for inspection at the place where the service is provided, or sent to the customer.

The Regulations also require service providers to provide contact details for customer complaints; to respond to complaints as quickly as possible; and to use best efforts to find a satisfactory solution to complaints.

The Department for Business, Innovation and Skills (BIS) has produced a guidance note for business on the Regulations.

The English High Court has recently found a director personally liable for fraudulent misrepresentations made by a company of which he was sole director. The misrepresentations were made in the context of a sale of the entire share capital of another company. The director had been the sole negotiator of the sale and signed the share purchase agreement on behalf the selling company.

In order for a misrepresentation to be fraudulent, it must be proved that the person making it did not honestly believe that it was true. Where fraudulent misrepresentation is established, as this case indicates, a director who made the misrepresentation can be held personally liable.

If you would like a free copy of Morton Fraser’s guide to the law applying to company directors, please contact Austin Flynn.

The Companies Act definitions of “subsidiary” and “holding company” are commonly used in contracts to refer to the wider corporate groups of the contracting parties.

The Court of Appeal has recently held that the granting by a holding company of a pledge (security) over the shares in its subsidiary and the registration of the bank as the holder of those shares caused the subsidiary to cease to be a subsidiary of its holding company. This English decision potentially has particular significance in Scotland where registration of the Bank as shareholder of the ‘subsidiary’ is necessary to perfect security over shares.

While the facts of this case were somewhat unusual and would not apply in the majority of situations (a parent company which held the majority of the voting rights in the subsidiary before the pledge is not affected), the consequences of the decision are unexpected and potentially significant for those companies to which it applies. In most cases it will be straightforward to establish whether or not a company that has pledged, or plans to, pledge a subsidiary's shares is likely to be affected by this decision. If you would like advice on this issue, please contact Austin Flynn.

To any company, employees are key to making the business a success. Dealing with them when things go wrong, can also be one of the biggest headaches to be faced. Employment law continues to be one of the fastest moving areas of the law and 2010 is once again a year where employers need to keep up-to-date with changes in this field. Of particular note is the forthcoming Equality Act which is intended to come into force in October and is expected to strengthen and harmonise discrimination law. However while this is likely to be the most significant piece of legislation affecting employers / employees this year, there are a myriad of other changes / developments to keep in mind.

From April, sicknotes will be replaced by "fit notes" as part of the government's plans to reduce the absence record which takes huge sums out of the economy in wasted resources each year. Provisions regarding a new right to request unpaid training or study also come into force in April. There are also likely to be changes afoot regarding the statutory retirement age and there are several tribunal cases on age discrimination which could have a profound effect on employers. One issue which employers often ask about is whether they have to agree to an employee's demand to be allowed to bring a lawyer with them to a disciplinary meeting. The short answer is that in most cases, the employer can refuse such a request. However two recent decisions have suggested that in some (very limited) cases this may not be the case.

To assist employers in what remains an uncertain world, we have launched a new Employment Protection Package to provide a comprehensive solution to employment law issues. This includes an annual documentation "heath check", 24 hour access to employment law advice and insurance cover against most Tribunal awards of up to £250,000 including legal costs. If you would like more details or a free quote, please contact Graeme Dickson.